2026-08-15 22:02:10
Welcome to the Saturday PRO edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
📊 Monthly reports: 200+ companies visualized.
📩 Tuesday articles: Exclusive deep dives and insights.
📚 Access to our archive: Hundreds of business breakdowns.
📩 Saturday PRO reports: Timely insights on the latest earnings.
Today at a glance:
🦎 Berkshire: Cash Starts Moving
📱 Tencent: AI Bill Arrives
🌐 Cisco: Networking Supercycle
⚙️ Applied Materials: Tool Bottleneck
🌊 Sea Limited: Shopee Monetizes
🏦 Nubank: Credit Fears Ease
🚚 JD.com: Profit Inflects
💳 Adyen: Platform Broadens
👟 On: Premium Focus
💊 Hims & Hers: GLP-1 Trade-off
🛍️ Global-e: Managed Markets Scales
📆 Monday.com: AI Mix Jumps
🇧🇷 StoneCo: Credit Risk Rises
🌎 DLocal: Volume Eats Take Rate
Berkshire Hathaway Q2 revenue rose 10% Y/Y to $101.8 billion, while operating profit before tax reached $14.4 billion.
Manufacturing was the standout, with revenue up 13% and profit rising 24%.
Insurance was softer, with underwriting profit down 13% and GEICO underwriting earnings falling 45%.
The bigger story is the capital allocation under new CEO Greg Abel. Berkshire bought $23 billion of stocks while selling just $3 billion, its first quarter as a net buyer of stocks in more than three years. That included roughly $10 billion of Alphabet. Berkshire also repurchased $4.5 billion of its own stock in Q2, followed by an estimated $3.4 billion more in July.
As a result, the cash pile fell to $365.5 billion from roughly $397 billion in Q1. That is still enormous, but the direction has changed. Berkshire is also deploying capital through acquisitions, including the $6.8 billion purchase of homebuilder Taylor Morrison.
Bottom Line: The Abel era is starting to look different. Berkshire remains extraordinarily liquid, but buybacks, equity purchases, and acquisitions are finally putting meaningful chunks of its cash pile to work. The question is no longer when Berkshire will deploy capital. It is whether Abel can earn Buffett-like returns on it.
2026-08-14 20:03:46
Welcome to the Free edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
There is more demand for compute than the biggest cloud companies can supply.
That gap has fueled the rise of neoclouds, specialized providers built around AI infrastructure. They focus on securing raw power, specialized data-center capacity, and accelerator clusters rather than replicating the broad software ecosystems of AWS, Azure, or Google Cloud.
Three distinct neocloud models reported this week, offering a clear view into how different strategies tackle this compute bottleneck:
CoreWeave: Pure-play NVIDIA GPU fleet rental scaling on long-term enterprise commitments.
Nebius: An AI-focused cloud platform built from scratch on international data-center infrastructure.
Cerebras: A proprietary chipmaker pivoting into cloud-hosted fast inference.
The economics across all three are counterintuitive. Capacity must be funded and built months before it can generate revenue, driving negative free cash flow. Debt, leases, depreciation, and customer concentration matter almost as much as growth.
Let’s review what we learned.
CoreWeave is the purest version of the neocloud model. It buys NVIDIA GPUs, installs them in data centers, and rents the compute to customers such as OpenAI, Microsoft, and Meta.
Most of the business is already spoken for. Committed contracts generated 98% of Q2 revenue, while on-demand usage contributed just 2%.
Revenue jumped 112% Y/Y to $2.6 billion, but gross margin contracted by 8 points to 66% as data-center rent, power, and other ramp costs grew even faster.
CoreWeave posted a $49 million operating loss and a $626 million net loss, heavily weighed down by $640 million in interest expense tied directly to its GPU-collateralized debt facilities.
And the income statement captures only part of the spending. Q2 CapEx reached $9.4 billion, more than three times quarterly revenue.
📚 Demand keeps outrunning capacity: Backlog reached $104 billion, up 246% Y/Y, before another $25 billion of customer commitments signed in early Q3. Near-term capacity is effectively sold out.
💰 Margins are expected to turn: Gross margin contracted as CoreWeave raced to bring new capacity online, but adjusted operating margin improved sequentially from 1% to 5%. New Q2 contracts are expected to carry contribution margins 5 to 10 points above recent deals, even before July’s roughly 25% price increase.
🧠 The mix is getting better: Storage, CPU, networking, and software now exceed $400 million of ARR. Managed inference jumped from $1 million to more than $100 million of booked ARR in a single quarter.
🏗️ Growth remains extremely expensive: CoreWeave raised its 2026 CapEx outlook to $35 billion to $39 billion as it races toward more than 1.85 GW of active power by year-end.
Bottom line: CoreWeave’s $104 billion backlog sounds almost absurd next to a targeted 2026 exit revenue run rate of $19 billion. But conversion is constrained by physical capacity. The investment case comes down to how quickly it can turn power and GPUs into revenue without letting financing costs overwhelm the margin gains.
Nebius did not start as a typical AI infrastructure startup.
🇷🇺 Yandex roots: Nebius emerged from the 2024 breakup of Russian tech giant Yandex. Its Nasdaq-listed Dutch holding company sold the Russian operations for $5.4 billion and kept a smaller group of international businesses that became Nebius.
♻️ Public-company reset: The remaining company kept its Nasdaq listing, rebranded as Nebius Group, and put Yandex co-founder Arkady Volozh back in charge.
☁️ AI infrastructure pivot: Rather than rebuild the old internet conglomerate, Nebius used its engineering talent, cloud expertise, and capital base to build a purpose-built AI cloud.
AI Cloud generated $575 million, or 98% of Q2 revenue, by renting GPU capacity through its own cloud platform.
Revenue surged 454% Y/Y to $582 million, while gross margin expanded 6 points to 77%. The business also generated $236 million of adjusted EBITDA at a 41% margin.
Nebius posted a $176 million operating loss, but depreciation and amortization alone reached $260 million as billions of dollars of new infrastructure started hitting the income statement.
💰 Pricing is moving higher: Four new AI cloud deals averaged more than $1 billion of contract value and $20 million to $25 million per megawatt. Shorter-term capacity is now fetching as much as $40 million to $50 million per MW.
⏱️ Payback is getting faster: Management estimates the Q2 contracts will repay their associated CapEx and operating costs in about 22 months, down from the previous two-to-three-year range.
🏗️ The buildout is enormous: Q2 CapEx reached $5.7 billion, almost 10 times quarterly revenue. Nebius still expects $20 billion to $25 billion for the year.
🤝 Customers are helping finance it: Nebius expects more than $9 billion of customer prepayments in 2026, covering roughly 50% to 60% of the associated CapEx.
Bottom line: Nebius is spending at extraordinary scale, but rising prices, faster paybacks, and customer prepayments are making each new megawatt more attractive. That capital efficiency may ultimately matter more than its 454% revenue growth.
Cerebras is the odd one out among neoclouds. Instead of buying NVIDIA GPUs, it designs its own wafer-scale processor and monetizes it either by selling systems or renting the compute through Cerebras Cloud.
The revenue mix is shifting quickly. Q2 revenue rose 74% Y/Y to $180 million, with Cloud & Other Services surging 281% to $126 million while hardware fell 23% to $54 million.
The company had a brutal $477 million operating loss, but the headline needs context. Cerebras went public in May, triggering substantial stock-based compensation. Its core operating loss was just $34 million, compared with $477 million under GAAP.
Core results exclude stock comp, customer-warrant charges, and certain pass-through items. This stock-based compensation overhang should normalize over upcoming quarters as initial post-IPO equity grants settle.
Reported gross margin was just 14%, but on a core basis it was 41%, up about 9 points Y/Y. That was down from 46.5% in Q1, partly because Cerebras is temporarily paying to rent back systems it previously sold so it can meet cloud demand.
☁️ Cloud has become the growth engine. Core cloud revenue nearly quadrupled to $128 million and surpassed hardware for the first time.
📈 The outlook improved. Cerebras raised FY26 core revenue guidance to $880 million to $890 million, alongside higher gross-margin and operating-margin expectations.
🏗️ Capacity is still the bottleneck. More than 600 MW of data-center capacity is now live or contracted through 2027. Core gross margin is expected to bottom in Q3 before new capacity comes online and reduces the need for expensive rented capacity.
📚 Demand is far ahead of revenue. Remaining performance obligations reached $25.4 billion. OpenAI remains a major customer, but converting that backlog requires substantially more infrastructure.
Bottom line: Cerebras is evolving from a chip seller into a fast-inference cloud. Stock comp and other accounting adjustments obscure that progress, but the real test is converting its enormous backlog into revenue while rebuilding margins as new capacity comes online.
Across all three neoclouds, the same tension keeps showing up. Demand is outpacing available compute, but serving it requires enormous amounts of capital before revenue arrives.
That same compute shortage is pushing tech giants to build their own capacity. Meta is scaling custom silicon and gigawatts of GPUs, while SpaceX has already started selling access to its Colossus cluster. The longer-term question is whether neoclouds remain essential infrastructure partners or temporary relief valves once mega-cap AI capacity fully comes online.
The next phase comes down to capacity, margins, and funding. Neoclouds need to turn contracted demand into energized infrastructure, improve returns as utilization rises, and fund the next wave of expansion without letting debt or dilution overwhelm the economics.
The demand is locked in. Capital efficiency will separate the winners.
Next up: Saturday’s PRO edition will include the other big earnings of the week, like Berkshire, Tencent, Cisco, Sea Limited, Nu, Adyen, and more.
That’s it for today!
Stay healthy and invest on!
Thanks to Fiscal.ai for being our official data partner. Create your own charts and pull key metrics from 50,000+ companies directly on Fiscal.ai. Start an account for free and save 15% on paid plans with this link.
Disclosure: I am long AMZN, MSFT, GOOG, NVDA, AMD, TSM, and ASML in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2026-08-11 20:01:19
Welcome to the Premium edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
For years, media companies treated streaming like a land grab. That era is ending.
Streaming is starting to look like a mature business. Disney reached a 13% streaming margin, Paramount hit 15%, and Warner Bros. came in at nearly 17%. Subscriber totals matter less than churn, pricing, engagement, and how much profit each viewer can generate.
Meanwhile, the businesses streaming is replacing keep shrinking. Warner’s Networks revenue fell 17%. Paramount’s TV Media declined 9%. Cord-cutting and weaker advertising continue to eat away at linear TV.
Paramount’s Warner Bros. deal has cleared most international regulators, but a US antitrust fight has pushed the timeline into 2027. The longer it drags, the more expensive the deal becomes.
Can streaming profits grow fast enough to outrun the decline of the old bundle? And how expensive could the merger delay become?
Today at a glance:
🏰 Disney: Parks Answer the Doubters
🎥 Warner: Box Office Whiplash
⛰️ Paramount: Stronger Before the Storm
FROM OUR PARTNERS
Alumni Ventures is giving readers early access to high-potential startup opportunities across today’s most active sectors, co-invested alongside name-brand VC firms like Andreessen Horowitz (a16z), Bessemer, & Y Combinator.
You get:
Curated deal flow of high-potential startups
Invest alongside well known lead venture firms in these deals
No cost to see deals
No obligation to invest
Don’t miss your chance before access closes.
Disney’s fiscal year ends in September, so the June quarter was Q3 FY26.
📸 Big picture: Revenue rose +7% Y/Y to $25.2 billion ($0.2 billion miss), while adjusted EPS jumped +28% to $2.06 ($0.21 beat). Total segment operating income rose +21% to $5.6 billion, ahead of expectations. Disney maintained its FY26 outlook for ~12% adjusted EPS growth and raised its buyback target again to at least $9 billion.
📈 Streaming margin expands again: Disney+/Hulu revenue grew +11% to $5.5 billion, while SVOD operating margin reached 13%, extending last quarter’s profitability inflection. Disney remains on track for double-digit streaming margins in FY26, though management says international monetization still has room to improve.
🍿 Entertainment gets its hit: Entertainment operating income surged +64% Y/Y, helped by streaming profitability and Toy Story 5, which crossed $1 billion at the global box office. The film also lifted merchandise sales and Disney+ engagement, showing how a successful franchise can reverberate across the company.
🏰 Experiences answer the skeptics: Experiences revenue rose +10% to a record $10.0 billion, while operating income jumped +20% to $3.0 billion. Domestic park attendance grew +3%, and per-guest spending rose +4%, with Walt Disney World having a particularly strong quarter. International visitation remains soft, but forward bookings are healthy.
🏈 Sports remains the weak spot: Sports revenue reached roughly $4.5 billion, while operating income fell -17% to $858 million, hurt by shorter NBA playoff series and rights timing. ESPN remains the clearest drag on Disney’s otherwise improving profit mix.
🤖 Disney+ gets a roadmap: CEO Josh D’Amaro said Disney will begin expanding Disney+ beyond video in spring 2027, adding games, merchandise, and other experiences designed to lower churn and increase lifetime fan value. Disney is also considering free ad-supported offerings as it turns Disney+ into the company’s broader digital hub.
Bottom Line: Streaming profitability is becoming repeatable, while Experiences just delivered the quarter investors feared it couldn’t. That gives D’Amaro more room to execute his “One Disney” strategy, with Disney+ increasingly positioned as the front door to content, commerce, and experiences.
2026-08-08 22:02:33
Welcome to the Saturday PRO edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
📊 Monthly reports: 200+ companies visualized.
📩 Tuesday articles: Exclusive deep dives and insights.
📚 Access to our archive: Hundreds of business breakdowns.
📩 Saturday PRO reports: Timely insights on the latest earnings.
Today at a glance:
💊 Eli Lilly: Volume Crushes Price
🦠 Merck: The Bridge Broadens
🧬 Amgen: Growth Outruns the Cliff
🇩🇰 Novo Nordisk: Pill Holds Up
💉 Pfizer: Pipeline Questions
🌐 Arista Networks: Supply Catches Up
💾 Sandisk: AI Eats NAND
☁️ Cloudflare: Agentic Acceleration
🌊 DigitalOcean: AI Accelerates
🐶 Datadog: AI Concentration Bites
☁️ Atlassian: Enterprise Breakout
📢 HubSpot: Pricing Pivot Bites
🎨 Figma: AI Credits Scale
🏴 Klaviyo: Agents Gain Traction
💬 Twilio: Expansion Returns
💻 Paycom: Margins Do the Work
⚡️ Axon: Dedrone Breaks Out
🤝 MercadoLibre: Brazil Bet Pays Off
🥡 DoorDash: DashPass Takes Over
🇰🇷 Coupang: Customers Return
🥕 Instacart: Customers Come Back
📦 Etsy: Back to Etsy
🍞 Toast: Locations Reaccelerate
🔲 Block: Square Catches Up
💳 Fiserv: Reset Gets Deeper
🪙 Circle: Arc Hits the P&L
🏠 Zillow: Growth Without Traffic
🏝️ Booking: Travel Holds Up
🛖 Airbnb: Hotels Check In
🏨 Marriott: US Momentum Holds
✈️ Expedia: Consumer Catches Up
📱 AppLovin: Model Timing Miss
📺 The Trade Desk: Growth Stalls
📌 Pinterest: Growth Speed Bump
👻 Snap: Reset Starts Working
🎧 Spotify: 300 Million Paid
🔥 Match Group: Tinder Stabilizes
🦉 Duolingo: Streak Revival
🗞️ NYT: Subscriber Growth Slows
🚲 Peloton: Profit Without Growth
🎮 Sony: Beyond PlayStation
🎮 Take-Two: GTA VI Preorders Explode
📺 Fox: World Cup Windfall
🏈 Flutter: FanDuel Needs a Reset
👑 DraftKings: Predictions Get Expensive
🍟 McDonald’s: Value Misfires
🍔 RBI: Burger King Breaks Out
🌭 Kraft Heinz: Green Shoots
⚡️ Celsius: Alani Carries the Portfolio
Lilly’s Q2 revenue jumped 48% Y/Y to $23.0 billion ($2.3 billion beat), while adjusted EPS was $8.38 ($1.80 beat). Revenue growth came from a 60% increase in volume, more than offsetting a 13% decline in realized prices.
Mounjaro surged 91% to $9.9 billion and Zepbound grew 46% to $4.9 billion, bringing combined GLP-1 revenue to nearly $15 billion. International Mounjaro sales more than doubled to $5.2 billion as Lilly expands access globally, despite significant price reductions including China reimbursement.
Foundayo, Lilly’s newly launched oral GLP-1 obesity pill, generated $98 million in its first quarter on the market. The next-generation pipeline also advanced materially: retatrutide (triple-hormone obesity injection targeting GLP-1, GIP, and glucagon) delivered positive results in three additional Phase 3 obesity trials. Lilly plans to file with the FDA in Q1 2027.
Lilly raised FY26 revenue guidance to $85–$87 billion, a $2.5 billion midpoint increase. Underlying EPS guidance was also raised by $2.78 at the midpoint, but $3.03 of acquisition-related R&D charges offset that improvement, leaving reported guidance at $35.50–$36.50.
Bottom Line: The GLP-1 story remains a volume machine. Lilly is deliberately giving up price to expand access, and demand is more than compensating. Foundayo adds a new format today, while retatrutide increasingly looks like the next major leg of the obesity franchise.
2026-08-07 20:03:44
Welcome to the Free edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
This week, we’re visualizing more than 50 earnings reports across tech, healthcare, commerce, and everything in between.
Today at a glance:
🚖 Uber: AV Anxiety
🍄 Nintendo: Software Cushion
🛍️ Shopify: Deceleration Dodged
Uber’s Q2 revenue rose 12% Y/Y to $14.2 billion ($70 million miss), though an accounting shift from a merchant to an agency model in UK Mobility reduced reported growth by 8 points.
Gross Bookings grew 24% (or 22% constant currency) to a record $58.0 billion, marking the fourth consecutive quarter above 20%.
Trips rose 18% to 3.9 billion, driven by 16% growth in monthly users. The 2-point slowdown in trip growth came entirely from Brazil, Uber’s highest-volume market, where competition for two-wheel drivers constrained supply. US Mobility actually accelerated as insurance savings funded lower prices, with trip growth strongest in markets like San Francisco and Los Angeles where fares fell the most.
Mobility bookings grew 20%, while Delivery accelerated to 25%. That growth is increasingly flowing through to profits. Adjusted EBITDA rose 33% to $2.8 billion, with margin reaching 4.9% of Gross Bookings. Trailing-12-month free cash flow crossed $10 billion for the first time, giving Uber more room for buybacks, M&A, and AV investment.
Autonomy remains the valuation debate. Uber is now live with AVs in seven cities and still targets 15 by year-end. Management argues its advantage is not building the autonomous driver itself, but aggregating demand, dispatching vehicles, handling fleet operations, insurance, and regulators. In mature AV markets including San Francisco, Los Angeles, and Phoenix, Uber says its overall category share is actually higher than a year ago.'
Yet the valuation already reflects plenty of AV anxiety. At roughly 10x 2027 adjusted EBITDA, Uber trades at a modest multiple for a business still growing bookings above 20%. The market is clearly pricing in some future erosion of Uber’s economics.
Uber guided Q3 Gross Bookings to $58.25–$60.25 billion, implying 18–22% constant-currency growth, while EPS guidance of $0.84–$0.88 was roughly in line.
Bottom Line: Uber’s core business keeps getting stronger and its Delivery Hero acquisition could deepen its flywheel. The market’s question has simply moved further out: how much of today’s economics does Uber retain once robotaxis scale?
Nintendo Q1 revenue (June quarter) fell 10% Y/Y to ¥518 billion (~$3.3 billion), but still beat expectations, while operating profit surged 151% to ¥143 billion, nearly double consensus. Net income rose 54% to ¥147 billion. The catch was that roughly $300 million of refunded US tariffs reduced cost of sales, providing a large one-time boost to profitability.
Switch 2 sold 3.8 million consoles, down 34% against last year’s launch quarter but already 23% of Nintendo’s 16.5 million FY27 target. It now has an installed base of 23.7 million units globally. That compares to 17.8 million units sold by the original Switch a year after launch.
The big surprise was that the original Switch software sales jumped 39% to 34 million units, versus just 9.5 million Switch 2 games. Tomodachi Life: Living the Dream sold 7.9 million units and Pokémon Pokopia 1.3 million, showing that backward compatibility is keeping the 150M+ Switch ecosystem economically relevant even as hardware migrates. Digital sales nearly doubled to ¥133 billion and reached 62% of software revenue.
IP-related revenue more than doubled to ¥35 billion, helped by The Super Mario Galaxy Movie, which has already passed $1 billion at the global box office. That higher-margin software and IP mix helped gross margin jump 22 points to 54%, although the tariff refund materially amplified the improvement.
Bottom Line: Nintendo left FY27 guidance unchanged at 16.5 million Switch 2 consoles, 60 million Switch 2 games, ¥2.05 trillion of revenue, and ¥370 billion of operating profit. The real test still starts in September, when a price hike takes the Switch 2 to $500 heading into the holiday season.
Shopify’s Q2 revenue jumped 34% Y/Y to $3.6 billion ($140 million beat), while GMV grew 32% to $115.6 billion. Free cash flow reached $654 million at an 18% margin, up from 15% last quarter. Shares surged as the recent deceleration scare proved premature.
Growth remained broad across merchant sizes, geographies, and channels. Shopify Payments penetration reached 68% of GMV (+3pp Y/Y), while Shop Pay has now processed more than $400 billion in GMV since launch.
AI commerce is also becoming more tangible. AI-driven traffic and orders to Shopify stores both tripled Y/Y, with AI-attributed orders converting at roughly twice the rate when agents use Shopify’s structured Catalog rather than scraped web data. Importantly, 75% of AI-attributed orders came from outside Shopify’s top 100 categories, suggesting AI discovery disproportionately benefits smaller merchants.
Shopify guided Q3 revenue growth to the low-30s%, well above the ~27% consensus and implying a sixth consecutive quarter above 30%. Free cash flow margin should also improve to the ‘high teens’ to ‘low 20s.’
Bottom Line: Q1 raised the question of whether Shopify was finally slowing. Q2 answered it decisively. GMV and revenue remain above 30%, margins are expanding, and AI is increasingly looking like a distribution tailwind rather than the disruption risk investors feared.
Next up: Saturday’s massive PRO edition, with over 40 companies visualized, including Eli Lilly, AppLovin, Sony, Airbnb, Spotify, and more.
That’s it for today!
Stay healthy and invest on!
Thanks to Fiscal.ai for being our official data partner. Create your own charts and pull key metrics from 50,000+ companies directly on Fiscal.ai. Start an account for free and save 15% on paid plans with this link.
Disclosure: I am long SHOP and UBER in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2026-08-05 06:51:05
Welcome to the Premium edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
This week, we’ll visualize more than 50 reports ranging from Airbnb to Zillow.
Today’s batch captures the mood of earnings season pretty well, with huge AI ambition, rising capital intensity, and a few quieter stories improving underneath.
Today at a glance:
🕵️ Palantir: Sovereign AI
🚀 SpaceX: Growth Meets the Bill
↗️ AMD: Data Center Takes Over
🛵 Grab: The Overhang Shrinks
Palantir Q2 revenue jumped 93% Y/Y to $1.94 billion ($130 million beat), marking the 12th consecutive quarter of acceleration. Adjusted EPS of $0.41 beat by $0.06. The Rule of 40 score climbed again to 155, with adjusted free cash flow reaching $1.22 billion at a 63% margin.
US revenue keeps pulling away.
💼 US Commercial: $764 million (+149% Y/Y, +28% Q/Q).
🪖 US Government: $809 million (+90% Y/Y, +18% Q/Q).
Total US revenue reached $1.57 billion, up 115% Y/Y and now representing 81% of Palantir’s business. International revenue grew a much slower 33% to $363 million, with CEO Alex Karp again dismissive of Europe: “The growth sucks.”
The pipeline behind the print looks even more bullish. Palantir closed 220 deals worth at least $1 million, including 73 above $10 million.
TCV (Total Contract Value): The total value of contracts signed during the quarter reached a record $2.13 billion in US Commercial, up 153% Y/Y.
RDV (Remaining Deal Value): Contracted revenue not yet recognized climbed 124% Y/Y (and a staggering 27% Q/Q) to $6.24 billion in US Commercial, giving Palantir an increasingly large backlog behind future growth.
Palantir’s new framing is “sovereign AI.” Management argues customers increasingly want AI without handing proprietary data, workflows, or competitive intelligence to frontier model providers. AIP (Palantir’s AI Platform) sits between companies and the models, letting customers swap LLMs while keeping their data and operational logic under their own control. Karp put it more bluntly: customers should not become “vassal states of the language labs.”
We discussed last quarter that tokens are the new coal. Models and tokens are becoming cheaper commodities. Palantir wants to own the governed operational layer where companies turn them into actual work.
Palantir raised FY26 revenue guidance by roughly $500 million to $8.15–$8.16 billion, implying 82% growth, versus 71% expected just three months ago. US Commercial is now expected to grow at least 134% to more than $3.42 billion. Adjusted free cash flow guidance increased to ~$4.6 billion (from ~$4.3 billion previously).
Bottom Line: The fundamental story somehow keeps getting stronger. Revenue growth accelerated, US Commercial is now 39% of the top line, and free cash flow margins have crossed 60%. The valuation is still extreme at nearly 80x FY26 EBITDA, but Palantir is doing something equally extreme: accelerating above 90% revenue growth at nearly $8 billion of annual revenue while simultaneously expanding margins.
SpaceX’s first earnings report as a public company showed why investors are excited about the business and why the valuation remains difficult to digest.